Tesla stock remains in a bear market after falling nearly 30% from its December high. It ended last week at $354, about 9% below this month’s high of $388. Attention now turns to the upcoming earnings report, which should shed more light on the company’s growth and cash flows.
Tesla Earnings to Shed Light on its Growth and Cash Burn
Tesla, a member of the Magnificent 7 group of companies, will be in the spotlight as it publishes its financial results on Wednesday. These results come two weeks after management delivered the third-quarter delivery report.
Tesla made 464,391 vehicles in the quarter and delivered 486,532 of them. These deliveries were slightly lower than those it delivered in the same period last year, when Americans rushed to buy its vehicles ahead of the federal tax credit expiry.
Benzinga data shows that analysts expect the upcoming report to show that its revenue was largely flat year-on-year to $28.1 billion. The most optimistic analyst expects the figure to come in at $30.5 billion.
On the other hand, the earnings-per-share is expected to come in at 45 cents, lower than the $0.50 it made last year.
Most importantly, investors will focus on its cash flow statement. It reported a negative free cash flow of $1.1 billion in the second quarter as its capital expenditure soared to $5.8 billion in the quarter. Elon Musk and the team expect to spend $25 billion to fund its AI infrastructure, data centers, Optimus, and Cybercab.
Options Market Points to a Rebound
The options market expects the stock to rebound after its earnings report. Options expiring this week have an implied volatility of 42%, slightly higher than the historical average of 33%.
Tesla has a put/call volume ratio of 0.53 and an open interest ratio of 49, meaning that more investors have a bullish positioning. In this case, most of the calls are positioned at $370, implying a 4.5% jump from the current level. Most of the calls are at $350, slightly lower than where it is today.
Top analysts are highly bullish on the company. Jefferies recently hiked target to $400 from the previous $350. Tigress Financial has a target of $550, while UBS Group sees it rising to $391. JPMorgan has a target of $415, while the average estimate is $412.
These earnings come a few days after Tesla unveiled the Roadster, a high-performance electric vehicle prototype capable of brief aerial maneuvers. It expects to start deliveries in 2028.